GOP Leadership, WSJ Both Flip On Spending Battle Over Doc Fix

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Congress is reportedly considering a deal to repeal the sustainable growth rate formula for Medicare, but at the cost of $200 billion — a turnaround for House leadership and others that have supported deficit-neutral repeal in the past. 

The SGR, passed by Congress under former President Bill Clinton, is supposed to require Congress to follow a formula to cut Medicare reimbursements to physicians to keep entitlement spending down. But in order to keep physicians from refusing to see Medicare patients at all, Congress has passed a “doc fix” now 17 times to prevent the cuts from taking place.

“Any deal that only offsets a fraction of the cost, like the one currently being discussed behind closed doors and leaked to the press,” Heritage Action communications director Dan Holler said in a statement this week, “is a non-starter for conservatives.”

The version of repeal on the table costs taxpayers over $200 billion and would also reauthorize the Children’s Health Insurance Program for another 2 years, as an incentive for Democrats to agree to the reform. But GOP leadership is also on board with the repeal this time around, even though it would add to the deficit.

That’s a quite a departure from just several years ago, when SGR repeal was being considered as a part of Obamacare. Now-Speaker John Boehner, of course, vehemently opposed Democrats’ plan in 2009 to repeal the SGR without completely paying for it.

As minority leader, Boehner slammed Pelosi for proposing a fix to the SGR without offsetting the cost. The GOP then had a proposal to repeal the SGR that would not increase the deficit, according to Boehner.

“Speaker Nancy Pelosi and House Democrats have voted to add nearly $300 billion to the deficit just days after the national debt topped $12 trillion for the first time in U.S. history,” Boehner wrote in a statement in Nov. 2009. “This irresponsible ‘doc fix’ proves once again that out-of-touch Washington Democrats simply cannot help themselves when it comes to piling debt on our kids and grandkids.”

Boehner’s not the only one who’s changed his tune. The Wall Street Journal editorial board pushed for Congress to pass the deal at hand Sunday evening.

“Congress is close to repealing a two-decade budget cheat and reforming the entitlement state for the first time in the Obama presidency. Miracles happen, though some members of both parties are trying to derail this one,” the board wrote.

“The bottleneck is ‘paying for’ SGR repeal. Republicans and even some Democrats seem to be under the impression that the formula leads to real savings, and thus ending it adds to the deficit….The SGR merely lets Congress hide the future spending it is going to do anyway. Yet the same conservatives who blame Congress for budget contortions defend the SGR.”

But in a 2009 editorial, WSJ’s editors again sided with Boehner: that the SGR should be repealed — and that repeal should be fully paid for.

“Everyone agrees that the SGR must be corrected, given that steeper cuts in Medicare’s submarket price controls mean that many physicians will refuse to treat seniors — but not without cleaning up the mess created by the prior cost-control inspirations of the political class,” the WSJ wrote in Nov. 2009. “A new Heritage Foundation study by the former Medicare trustee Thomas Saving and economist Andrew Rettenmaier finds that eliminating the SGR without offsets will increase Medicare’s unfunded liabilities by $1.9 trillion over the next 75 years. Given that the entitlement is already about $39 trillion in the hole…the SGR fix alone is a European-style value-added tax waiting to happen, not including the huge new permanent spending commitments created by Obamacare.”

Some conservatives, as pointed out by the WSJ, now find themselves at odds with the GOP leadership’s current position — but still in line with Republicans’ position back in 2009.

“The doc fix needs to be offset, no exceptions,” Holler told TheDC. “Other folks, including the Speaker, are changing that position.”

At issue is the $165 billion which the Committee for a Responsible Federal Budget says the structure has saved taxpayers since 2004. Every time Congress passes a “doc fix” patch, they also offset the changes with cuts elsewhere in Medicare. There’s heated debate about the efficacy of the cuts long-term — WSJ’s editors certainly don’t think so. The current battle will center around whether repealing the series of doc fixes for good is worth the $200 billion cost.

The ongoing “patch” for the SGR runs out on Mar. 31 and CQ Roll Call reports that Republicans expect to begin dealing with legislation the week of Mar. 23.

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Sarah Hurtubise